The Greeks

The Greeks are key tools used by traders to measure different aspects of a stock option’s risk and potential. Delta indicates how much the option’s price might change if the underlying stock moves. Gamma shows how Delta itself may change as the stock price shifts. Theta reflects the time decay, meaning how much the option’s value decreases as expiration nears. Vega measures how sensitive the option is to changes in the stock’s volatility. These metrics help traders assess risk and make informed decisions about buying or selling options, aligning trades with their market outlook and risk tolerance.